Who invests in home equity to exempt wealth from bankruptcy? : [This draft: May 2013]

  • Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios towards home equity. Using US household data for the period 1996 to 2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:Stefano Corradin, Reint GroppGND, Harry Huizinga, Luc Laeven
Parent Title (German):SAFE working paper series ; No. 21
Series (Serial Number):SAFE working paper (21)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2013
Year of first Publication:2013
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2013/06/27
Tag:Home ownership; Homestead exemptions; Personal bankruptcy; Portfolio allocation
Issue:Draft: May 2013
Page Number:49
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht